THE RECKONING OF DAMAGES IN FLUCTUATING EXCHANGE

Authors

Joseph H. Drake, University of Michigan Law School

Abstract

Not the least serious of the evil effects of the Great War has been the resultant collapse in value of the currencies of foreign countries and the consequent dislocation of exchanges. The case of Sirie v. Godfrey, decided in the Appellate Division of the Supreme Court of New York, presents clearly one of the legal problems arising out of this situation. Goods were bought by an American lady in Paris, in 1913 and 1914, at a cost of about 10,000 francs. These goods were delivered in due time but were not paid for. At the time the goods were delivered the franc was worth approximately twenty cents. Suit was afterwards brought in New York for the purchase price, and when it came to judgment, in 1921, the franc was worth about five cents. A judgment in an American court must of course be rendered in dollars, so the question is, shall the 10,000 francs be turned into dollars as at the date of the breach of the contract, in which case the plaintiff will get about $2000, or as at the date of judgment, when the plaintiff will receive only about $500? The New York court in this case adopted the date of judgment. Although this decision has been very much criticized, it is believed that it was correctly decided, and that the same conclusion should always be reached, if, on the same state of facts, the breach of contract is waived and suit brought for the price. In the case of Peyrae v. Wilkinson, recently decided in the Court of the King's Bench, the facts were practically the same and "the action was brought by the plaintiff to recover the balance of the price of goods sold and delivered". The English court decided that the date of the breach of the contract should be taken as the date at which the domestic judgment expressed in pounds should be transformed into francs. As neither of these decisions was in a court of last resort, and as they arrive at opposite conclusions, it may well be said that the question is still open.

Recommended Citation

Joseph H. Drake, THE RECKONING OF DAMAGES IN FLUCTUATING EXCHANGE, 23 Mich. L. Rev. 695 (1925).
Available at: https://repository.law.umich.edu/mlr/vol23/iss7/2